SENIORITY

Seniority is defined as the length of service by an employee in a
continuing or temporary job or position. In some employment situations,
time in supplemental positions may be added to an employee's
seniority as well. Seniority is typically an issue for human resources
managers and is important in managing resources, establishing compensation
methods and policies, negotiating collective bargaining agreements with
labor unions, and determining individual pay in some organizations.

Seniority may be used as a tie-breaker in overtime distribution, in hiring
from a previous layoff list, or as a factor in consideration for vacant
positions in a company. Seniority may be used to determine pay in
organizations instead of or in addition to a merit-based
pay system. If organizations do not pay employees on the basis of doing
the same work and holding the same level or rank in the organization, they
must determine a basis to make a pay distinction or differentiation. In a
large organization, compensation specialists within the human resources
area may make these determinations and may consider an employee's
seniority in the pay decision.

SENIORITY TODAY

According to a recent article in
Fortune
, seniority no longer matters in most companies. In the past, when
employees were fired, the younger or junior members were the first to be
let go. Today this situation tends to be reversed, due to changes in the
world and in the work place. Even with a good economy firms no longer
respect the hierarchy and may eliminate jobs held by the most senior
employees. The
Fortune
article suggests that companies have less tolerance for employees who are
earning in excess of their output, and this is typically a characteristic
of the most senior members of an organization. Today an older employee can
be replaced by someone younger earning less than half as much salary.

While seniority was valued in the past, for many people today, the longer
you have been with a company, the more your job may be in jeopardy.
Technology is cited as the reason for the change. Younger workers are
perceived as more creative and innovative and may have more relevant
educational experiences and training. Just as the product life cycle has
shortened, so too has the career cycle of employees. Today job change and
diversity of experiences is valued more than seniority.

SENIORITY IN JAPAN

In the past, the seniority system in organizations was a measure of job
security in the employment relationship. Even in Japan, where lifetime
employment has long been the norm for large, traditional businesses, many
companies are abandoning these plans and no longer offering lifetime
employment.

Employment practices in Japan—which were once characterized by
seniority, company unions, and lifetime employment—have been
undergoing a structural transformation as the nation struggles to correct
current economic issues. Since the collapse of the Japanese bubble economy
early in the 1990s, Japanese companies, like their American counterparts,
have been forced to restructure and have adopted a system of determining
promotions and salaries not on seniority but on merit. This has
dramatically changed their once-treasured code of seniority, according to
Focus Japan
.

In addition, the percentage of workers belonging to labor unions has
steadily dropped, eroding the influence of the once-powerful Japanese
company unions. Today's younger workers and new entrants to the job
market are becoming less interested in the prospect of lifetime
employment. As a result, many are considering entrepreneurship and
self-employment as a more viable career choice.